NOW the country’s insurance companies have to bear the worst testimonies of politicization. Malpractices, nepotism and dishonesty have grasped the whole sector leading to a surfeit of corruption. Even the tendency of evading tax has been a common practice in insurance companies as reported The New Nation on Sunday. Therefore, National Board of Revenue (NBR) decided to investigate the insurance companies evading tax. It is not utterly surprising that some companies by this time have earned black names to be enlisted in the row of tax evasion in the insurance sector. Reports have it that the central authority of the country’s tax administration, NBR formed a three-member committee to find out the tax-evasion incidents by the insurance companies. In this regard, NBR Chief has already directed his concerned officials to make a list of insurance companies to pin-point which companies are evading tax and how much. Some insurance companies hide their actual incomes and expenditures in their files, depriving the government of considerable amount of revenue, according to NBR’s Central Intelligence Cell (CIC), added the news report.
There are some 75 insurance companies in the country, including government-owned Sadharan Bima and Jibon Bima. Of the insurance companies, 46 are enlisted in the capital market. Very unwisely, most of the private insurance companies were given permission due to political considerations (or to politically linked people) not considering the economic necessity or market situation. Malpractices such as family centric boards which serve business interests of the directors, i.e. A gets benefit from D, D from B, B from C and C from A and like wise are mostly common in these companies. Besides, issuing cover notes without payment or premium, or the facilitation of foreign trade such as export-import with unrecorded or non-substantiated cover notes, high salary or benefits for the top management, mostly wards of the promoter-directors etc are all too common in these companies. Thus hiding the earnings for tax evasion is not unusual there.
These companies are, in fact, involved in the insurance business (mainly general insurance) as 3rd parties. They reinsure the risk with the state-owned general insurance corporation and thus, these private insurance companies fire the shot keeping gun on others’ shoulders and enjoy the benefits of maximum profits with minimum risks taken.
Though belated, it is obviously hopeful that NBR has realized the loopholes of such insurance companies. NBR suggested that if the tax evasion incidents can be reduced in this sector, then the amount of tax collection would get a considerable boost. We also share the same view and suggest that the companies involved in evading tax must be brought to book. We should not let the insurance companies function as cheating companies only to grab public money for easy gains. The NBR should tighten its grip.
